The Association of Costs Lawyers’ response to the preliminary Jackson Report recommended that Part 36 offers be introduced into detailed assessment proceedings. So it has come to pass, with Part 36 in assessment proceedings from 1 April 2013. Iain Stark, ACL Chairman, writing in Costs Lawyer magazine, “applauded” this development.
Let me tell you a story.
Claimant firm Paye Cash & Praye are currently negotiating with defendant costs firm Kermit & Co over a £10,000 bill. Points of Dispute and Replies have been served.
On 2 April 2013 Paye Cash & Praye make a Part 36 offer to settle those costs for £7,000.
Kermit & Co accept the offer on 3 April 2013.
Acceptance of the offer creates a deemed costs order under the new CPR 44.9(1)(b). Under CPR 36.10(1) this means the receiving party is entitled to their costs of the assessment proceedings up to the date on which notice of acceptance was served.
The new CPR 47.20(5) states:
“The court will usually summarily assess the costs of detailed assessment proceedings at the conclusion of those proceedings”
However, the new CPR 44.1(1) clearly states:
“‘summary assessment’ means the procedure whereby costs are assessed by the judge who has heard the case or application”
In this example the matter has never come before a judge and summary assessment is not appropriate. All that’s left is detailed assessment proceedings in the absence of agreement.
In reliance on the deemed costs order Paye Cash & Praye serve a Notice of Commencement and new bill in respect of their assessment costs on 10 April 2013. (As an aside, where a matter settles prior to a provisional assessment being carried out, but the bill is for less than £75,000, does the £1,500 cap apply?) The costs claimed are £1,000. Service of the new Notice of Commencement amounts to commencement of new detailed assessment proceedings.
Kermit & Co, rather taken back by this turn of events, make a Part 36 offer of £800 in respect of those costs on 17 April 2013. No response to that offer is received within 21 days of service of the Notice of Commencement forcing Kermit & Co to serve Points of Dispute to the bill, which they serve on 1 May 2013. On 3 May 2013 Paye Cash & Praye serve Replies. On 4 May 2013 Paye Cash & Praye accept the Part 36 offer of £800. As the offer has been accepted within 21 days of it being made the Claimant is entitled to their costs of the new assessment proceedings up to the date on which notice of acceptance was served, including the period covering preparation of the new Replies.
Acceptance of the new Part 36 offer also creates a further deemed order for costs.
In reliance on the new deemed costs order Paye Cash & Praye serve a Notice of Commencement and new bill in respect of their further detailed assessment costs considering the Defendant’s Points of Dispute, drafting Replies and considering the Part 36 offer.
And so on, for ever.
Blindly incorporating Part 36 into detailed assessment was a terrible idea, unless you are a costs lawyer or law costs draftsman looking to make one case last you through to retirement.